onshoring manufacturing glass: half empty or half full?

October 23, 2011

A recent article in Forbes speculates that manufacturing jobs will start coming back to the US soon, partly based on one manufacturer’s plans to flee “the high costs of Chinese manufacturing for the relatively lower costs of the U.S.” And while people are celebrating this potential shift, it’s a bit of a mixed blessing.

From the average worker’s perspective, it’s definitely good if some of these manufacturing jobs actually come back to the US. Unfortunately, one of the reasons they’ll be returning is that wages in the US are so low, and falling even lower.

For example, one article, referencing data recently released by the Social Security Administration, notes that, “The median wage for the 150 million workers surveyed in 2010 was just $26,363.55 per person. For comparison, the poverty line for an average 4-person household is set at $22,350, while the line for a single person living alone comes in at $10,890.” Which means that, by definition, “50 percent of wage earners had net compensation less than or equal to the median wage.”

Another recent article points out that, “Over the past two decades — and especially since about 2000 — the share of national income that flows into wages and other kinds of worker compensation has been plummeting in various countries [here it’s dropped approximately 5% or about $500 billion a year since 1990].”

In essence, the addition of these new jobs, if they do come, will certainly help, especially when it comes to lowering the persistently high unemployment rate we’ve been experiencing since the 2008 economic collapse. But they’re most likely not going to be very high paying jobs, which is definitely good for capital, but not necessarily so good for labour.

And, of course, nobody talking about this seems to care that for every job we gain, a worker overseas may very well lose theirs. So, for me, the potential onshoring of manufacturing trend back to the US is a bit of a mixed blessing when looking at the big picture.